Tom Girardi: Lawyer, Ponzi-Swindler, and now Convict. How Did it Happen and No One There Knew?

[Music] hi friends Tony dwit here Missouri appell attorney and a guy who likes to make the law Mak Sense on YouTube Here's what we're discussing [Music] today today we have a sad case to talk about out of California and it's from California federal court so there's no video from inside the courtroom so sorry I guess you wind up having to look at me today here are rules in every state that govern the practice of Law and today we're going to talk about several of them the first and arguably the most important to this case is Rule 1.15 of the model rules of professional conduct it says that a lawyer must keep the client's property safe and that includes money and he has to keep it separate from his or her own meaning he can't put the check from the insurance company into his personal checking account and write you a check from his personal checking account he can only put it into a separate trust account and write you a check from that separate trust account that's the way lawyers been doing business for the last 70 or 80 years the second rule requires that subordinate lawyers those guys whose name is not on the door and who are in some cases used and thrown away like dirty Kleenex they have to understand that I was only following orders wasn't a defense at nurmberg and it's not a defense to charges of professional misconduct and the third rule which is also applicable here rule 8.3 says that when a lawyer knows that another lawyer has committed professional misconduct that lawyer has the responsibility the duty in fact to inform disciplinary authorities none of those rules are difficult to understand unfortunately they appear to be very difficult for lawyers to follow Tom gerardi was arguably one of the best lawyers in Los Angeles which has more lawyers than San Francisco has homeless people he rose to the top of the profession with a bunch of whole high-profile cases he helped get $333 million for the settlement of the Pacific Gas and Electric case that was the one that was dramatized later with Aaron Brockovich he was a fellow who was pulling in more than $3 million a year and had the Mansion the Maserati and the mistress or if you prefer wife he was nearly 80 years of age and he married one of these Real Housewives of Beverly Hills a young and gorgeous blonde who totally married him for love not money really and just because she left him when the financial trouble hit shouldn't cause you to doubt how real that love was but all of that the Mansion the Maserati and the and the mistress none of that was enough he wanted more he bought airplanes so that he could fly where he wanted when he wanted without having to mix with the great unwashed on a Southwest flight to say that he spent money like a drunken sailor is unfair to drunken Sailors because they will never have the kind of money that he had between 2010 and 2020 the prosecutors in this federal case say that he spent $12 million on private jets $3.8 million on jewelry and country clubs and $21 million to fund the entertainment career of his then wife Erica Jane he also transferred 26 million from his firm's coffers to his own though more than 80 $80 million would eventually get tied up in a bankruptcy and go to other creditors now when I practiced in Kansas which was many years ago there was a trial lawyer there who was arguably the best trial lawyer in Witchita and he had a string of similar victories in Kansas like gerardi had in in California the first time I met him he had on a gold chain that looked like somebody had spray painted a tow chain gold and looped it around his neck I mean it was huge it was gudy he had rings on three fingers of his left hand and three fingers of his right hand and the one I remember most had a matrix of diamonds across it that looked like it was a solar reflector oh and let's not forget the Rolex on his wrist that looked like a golden manhole cover with hands the man was literally dripping with gold everyone was in awe of the guy I was too new to get it I guess I still don't get it when you have to put that much gold on to convince people that you're successful you have a bit of a problem with your self-image I think I have a theory there are some men for whom success isn't enough because in the first place they never take time to think about what is enough and more importantly what is success these folks like gerardi suffer from an inferiority complex if Michael Jordan has two fer arities they have to have three if the next best lawyer has a 50 room mansion on the beach well they have to have a 70 room mansion in Beverly Hills and enough is never enough they are always looking to acquire that next thing that will will prove to them that they are worthy but there's a problem with reputations reputations can become self-perpetuating lies gerardi was widely regarded as the guy to go to if you had a serious injury case but in reality at least according to the prosecutors in this case gerardi was running a Ponzi scheme he was stealing the client's money and paying off older clients with the money won for newer clients in the meantime he was spend spending that money throwing buckets of cash around like they were going out of style accusations that gerardi was withholding money from clients co-counsel and litigation lenders dogged him for years he faced lawsuits for unpaid debts yet somehow he always managed to avoid punishment either by the courts or the State Bar of California and it is alleged that he had pretty deep ties to the State Bar in 2021 an investigation by the LA Times laid out this pattern of misappropriating funds and lying about it and that same year Gerard's attorney claimed gerardi was suffering from dementia and was placed under the conservatorship of his brother everyone had wanted to hire gerardi and his firm gerardi ke because they were the big guns the guys you could go to to get millions and in the last 10 years all those people got was heartaches at trial numerous clients tested ified about the lies that he made to them the money was coming in he'd say if you just wait a little bit it'll be here just hang on they would call they'd get to the point where they had to do something so they'd make a bar complaint and suddenly the money would appear that money probably came from somebody else's case some of the clients that were involved in this case there were four of them Joe Ru Gomez suffered burns on 80% of his body after a gas line explosion killing his his girlfriend Judy selberg's husband was killed in a boating accident Josephina Hernandez was injured by a faulty medical device and Erica sana's one-year-old baby was badly injured in a car crash with a drunk driver she was owed 17.5 million after her child later died the US attorney Prosecuting this case said he picked people in their Darkest Hour of their lives and told them what to believe he wasn't fighting for those clients he was lying to them year after year after year but even though the Bar complaints stacked up this was gerardi and you don't shoot at the king without knowing you can hit him and the bar did absolutely nothing but all this time there were people who did know what was going on one was the financial manager of the firm who had his own embezzlement scheme going the others were the associate lawyers even if they did not know for sure how the money was being stolen they had to know when angry clients called and wanted to know where cash was that something was a Miss they were getting paid really big bucks to work at a very prestigious firm and they'd all been told just like I was when I was a new lawyer that you never file a bar complaint against another lawyer it just isn't done so it wasn't done you might wonder what Gerard's defense was it was dementia he wasn't in his right mind he didn't know the gun was loaded the check was in the mail at trial he presented a pretty well rehearsed picture of a manip Pati he claimed he didn't even know who his lawyer was and on the stand he said the last thing I would do would be to take someone's money I wouldn't even think of it every client got every penny that that every client was supposed to get well that was not the truth and that wasn't all in Gerard's closing argument the federal public defender Charles Snyder placed the blame on Gerard's clients missing funds on to Chris Cayman the head of the law firm's accounting department and a codefendant Snider called the embezzler the Michael Jordan of Fraud and said he stole between 70 million and 80 million from The Firm over 10 years who was watching the Watchers while Snyder claimed gerardi was not paying close attention to the checks he was signing check after check was going from Gerard's pocket into cayman's pocket assistant us attorney Scott Petty pointed out in rebuttal that gerardi drained $4 million from the law firm's client trust account before Cayman was even hired to work for gerardi in keys and the one person you need you absolutely need if you're going to pull off a Ponzi scheme and pill for money out of clients settlements is an inside man and I think Cayman was the inside man who was cooking the books perhaps so that other partners wouldn't become aware and were assured things were going well but let's face it as I said before even if the books looked good the phone calls the angry clients and the Bar complaints were a giant red flag in the end the dementia RS didn't work there's a term they used a lot in the military when I was a medic was called mingering essentially claiming to be sick to avoid Duty gerardi had an expert that said he had dementia government put up experts who said he was basically Faking It the jury didn't buy his explanations according to local media one of the jurors said it wasn't a hard decision all the evidence was there the juror claimed that based on Gerard's testimony he thought May the guy wasn't all there but he also thought the evidence showed that that mental decline only began recently after the fraud had occurred without saying as much I think it was pretty clear that he thought this was not a very convincing act but it was an act the Damage Done to the legal profession in this case is very serious the lawyers who were there at the firm are going to have a very hard time finding a job in another firm they're going to be tired with the same brush as gerardi the belief will be that they had to know even if one or two of them might not have known their careers are damaged Beyond repair several years ago out in California there was a respiratory therapist who murdered about six patients at Glendale Adventist Hospital and to this day one of the things you absolutely can't put on a resume in California is that you worked at that hospital so again you do tend to be tired with the same brush even when you are not not guilty or responsible gerardi has now been disbarred and he's been convicted of four counts of wire fraud that could send him to prison for 80 years at 80 years of age he's too old to survive a full sentence and in spite of that he'll be sentenced to prison in a year maybe less he'll likely be granted compassionate release it's California after all how do you protect yourself from a lawyer like gerardi well you stay involved you demand to be present at all settlement negotiations because you get to have a voice settlement is your decision not your lawyer's decision you require an immediate written report if for any reason you can't be there during negotiations and if you feel you're not getting the straight scoop you talk to the other lawyers in the firm and if necessary hire a different lawyer to go as your intermediary and go find out what's going on with your case what you don't do is just trust the lawyer sit back and wait for the money to come in because your money may be in you know Grand Cayman along with the lawyer well that's what I have for you today thank you so much for watching if you have the opportunity you could do a kindness for someone today that would be wonderful I'd really like to know what you think about Tom gerardi and what he did and maybe even why he did it is it that he's just he had this acquisition complex that he had to buy things did he have an inferiority complex what do you think it is what is at the root of depriving people burned over 80% of their body of their just compensation why would anyone ever do that let me know what you think then after you have come on back tomorrow join me down here at the beach we'll talk about something else [Music] if you like this video here are a few others you might try and don't forget to subscribe have a terrific day guys [Music]